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EUR/USD jumps to a three-month high as long yields slide

The US Dollar Index hit an 11-week low near 98.70 after the Treasury said it will double longer-dated bond-buying operations.

Reported · Written up by our desk · Major Pairs

EUR/USD rose to a fresh three-month high around 1.1693 during the European session, after US long-dated bond yields fell. FXStreet attributed the move to a weaker US Dollar following the Treasury Department announcement that it will double down on bond-buying operations to help curb higher borrowing costs.

Strategists at Danske Bank said EUR/USD spiked higher after the Treasury increased buyback volumes of longer-dated Treasuries, a change that also coincided with a flattening of the US yield curve. They pointed to the 10-year US Treasury yield at about 4.64%, noting it was roughly 10 basis points below the peak seen on Tuesday.

The report also said the US Dollar Index, which tracks the greenback against six major currencies, extended its decline to an 11-week low near 98.70. Technical levels cited included EUR/USD trading above the 20-period exponential moving average around 1.1547, while the RSI reading of 73.98 signaled overbought conditions that could limit very near-term upside.

FXStreet added that near-term support is seen around the 20-day EMA near 1.1547, and that if the pair stabilizes above 1.1700 it could push toward May’s high near 1.1800. It also noted market expectations for an ECB rate increase at the September meeting, while the Fed is expected to keep rates steady.

Latest closeEUR/USD 1.157 ▲0.4%|Dollar index 99.64 ▼0.3%

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